FATF Grey List 21st February 2025 Update; Laos and Nepal Added, Philippines Removed

Under Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, Relevant Persons are required to conduct Customer Due Diligence (CDD) for their customers. The type of CDD to be adopted for a particular customer is based on the degree of MLTPF risks the customer poses to the Relevant Person.

In January 2024, the Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2024 came into force. It amended MLR 2017, and provided for the meaning of “high-risk third country” as follows:

• Countries included by the FATF in its Blacklist, or “High-Risk Jurisdictions subject to a Call for Action.”
• Countries included by the FATF in its Grey List or “Jurisdictions under Increased Monitoring.”

MLR 2017 prescribes conducting Enhanced Customer Due Diligence (ECDD) measures when:

• Engaging in business relationships with persons established in high-risk third countries
• Conducting transactions which are subject to CDD measures where any party to the transactions are established in a high-risk third country

Therefore, it is important for Relevant Persons to revise the following components of their AML/CTF/CPF Program whenever the FATF updates its Grey List:

• Firm-Wide Risk Assessment (FWRA): Relevant Persons should re-assess and revise the MLTPF risks that it is exposed to and ensure that geographical risks from high-risk third countries are given adequate weightage.
• AML/CTF/CPF Policies, Procedures, and Controls: Relevant Persons should update their MLTPF risk management measures and ensure that the same are tailored and proportional to their MLTPF risk exposure. This exercise would involve the following:
  • Adjust CDD procedures to ensure ECDD for customers from newly FATF Grey-Listed countries.
  • Reassess and conduct re-CDD for existing customers whose risk category has changed due to FATF Grey-Listing, applying ECDD where required
  • Update Customer Risk Assessment parameters to reflect geographical risk factors from the FATF Grey Listed countries accurately
  • Provide AML/CTF/CPF training to relevant employees on the impact of Grey List updates and necessary compliance measures
• Changing Configuration of AML/CTF/CPF Software: If the Relevant Person utilises software solutions for its AML/CTF/CPF compliance tasks such as CDD, CRA, transaction monitoring, etc, it should recalibrate the parameters in the software to align with the FATF Grey List update.

By implementing these measures, Relevant Persons can ensure AML/CTF/CPF compliance with regulatory requirements and mitigate evolving MLTPF risks effectively.